Climate change on the board: navigating directors’ duties

Abstract

A noteworthy trend within the surge in corporate climate litigation is the increasing focus on personal responsibility of corporate directors. In 2023, ClientEarth commenced a derivative claim against Shell and its directors in the English courts, arguing that those directors were in breach of their directors' duties under the Companies Act 2006. This article analyses the claimant's arguments, examines the basis upon which the court dismissed the claim and identifies the procedural challenges that are likely to be faced by future claimants in commencing similar claims. In light of the rising trend in shareholder activism, coupled with the ever-increasing regulatory requirements to strengthen corporate human rights and environmental performance, the article anticipates further attempts to bring derivative claims against directors for failing to take action to address climate change risks. It provides suggestions for the sorts of arguments that may have greater prospects of succeeding before the English courts.